Actually, he's not that bad. Both from a storyline perspective and from the gameplay one. For the former, BW did a good job of portraying someone who soldiers on even when the level of **** they've gotten themselves into is now far over their heads. I think the whole point of him is that he's _not_ Shepard, not ridiculously competent, but still manages to get things done despite that. Also, I think his loyalty mission shows that, yes, all things considered he is rather well adjusted.
Gameplay-wise ... well, there _are_ no bad characters, only bad ways to use them. Jacob isn't the tank Grunt is, and he doesn't dish out the kind of damage Legion or Garrus do with firearms, but he's very much a team player. It's up to you to find him the kind of setup that gives the best synergy. Personally, I give him Squad Incendiary and use him with Miranda or Thane for the Warp explosion combo. The first is a lot more useful than it sounds for any weapon with decent rate of fire - IMO, against organics, far more useful than Jack's Warp Ammo, and pretty damn good against armored mechs too. The second ... my opening salvo of almost any engagement is to use Shep to take care of one mook's defense, then hit the guy with Pull and Unstable Warp and follow up with whatever choice of attack the Shepard's got going at the time. It's a fairly solid opener, and if mooks get stripped of defenses by the explosion and get set on fire? Hey, bonus.
Some characters just work better with certain others, or with Shep. Others work equally well regardless of team combo (Miranda, Tali, Legion, Grunt).